2003 (3) TMI 208 - AT - Central Excise

Summary

Issues:
14 appeals filed by Revenue regarding duty on flavoured tobacco for captive consumption without payment of Central Excise duty.

Analysis:
The appeals involved a common issue regarding the duty on flavoured tobacco manufactured during the production of pan masala and cleared for captive consumption without paying Central Excise duty. The Respondents, manufacturers of pan masala, argued that the flavoured tobacco was not a marketable commodity, as it was only consumed in the factory for further manufacturing of Gutkha. The Commissioner (Appeals) had allowed the appeals, noting that the flavoured tobacco was not sold in the market and lacked evidence of being a marketable product.

The Department contended that the flavoured tobacco, falling under sub-heading No. 2404.40, was a distinct product attracting Central Excise duty and was marketable, despite not being actively marketed. They argued that the burden of proving non-marketability rested on the assessee, even if the product was classifiable under the Central Excise Tariff Act. The Respondents cited a Tribunal decision emphasizing that the intermediate product must be marketable to be considered fully manufactured, and the burden of proving marketability lay with the Revenue.

After careful consideration, the Tribunal found that the burden was on the Revenue to establish the marketability of the item, which they failed to do. No evidence was presented to show that the flavoured tobacco was sold or capable of being marketed. As the Revenue did not discharge the burden of proving marketability, the Tribunal upheld the Commissioner (Appeals)'s decision in favor of the assessee. Consequently, all 14 appeals filed by Revenue were dismissed.